Correlation Between DATATRAK International and EGF Theramed

Can any of the company-specific risk be diversified away by investing in both DATATRAK International and EGF Theramed at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DATATRAK International and EGF Theramed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DATATRAK International and EGF Theramed Health, you can compare the effects of market volatilities on DATATRAK International and EGF Theramed and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DATATRAK International with a short position of EGF Theramed. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATATRAK International and EGF Theramed.

Diversification Opportunities for DATATRAK International and EGF Theramed

0.77

Correlation Coefficient

DATATRAK International  EGF Theramed

Poor diversification

The 3 months correlation between DATATRAK and EGF is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding DATATRAK International and EGF Theramed Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGF Theramed Health and DATATRAK International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DATATRAK International are associated (or correlated) with EGF Theramed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGF Theramed Health has no effect on the direction of DATATRAK International i.e., DATATRAK International and EGF Theramed go up and down completely randomly.

Pair Corralation between DATATRAK International and EGF Theramed

If you would invest  6.50  in EGF Theramed Health on September 13, 2024 and sell it today you would earn a total of  15.50  from holding EGF Theramed Health or generate 238.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

DATATRAK International  vs.  EGF Theramed Health

DATATRAK International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATATRAK International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, DATATRAK International is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

EGF Theramed Health

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EGF Theramed Health are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical indicators, EGF Theramed reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DATATRAK International and EGF Theramed

The main advantage of trading using opposite DATATRAK International and EGF Theramed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATATRAK International position performs unexpectedly, EGF Theramed can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in EGF Theramed will offset losses from the drop in EGF Theramed's long position.

The idea behind DATATRAK International and EGF Theramed Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.